Today, the forex market saw the US Dollar fall below the 104.00 mark during Asian trading hours on Thursday, influenced by improved risk sentiment. This sentiment shift is awaiting several forthcoming PMIs, including HCOB Manufacturing and Services PMIs for Germany and the Eurozone, as well as S&P Global/CIPS PMIs for the UK and S&P Global PMIs for the US. These PMIs are expected to offer new insights into the economic conditions of these major economies.
The minutes from the Federal Reserve’s January policy meeting showed a unanimous agreement among policymakers on the risks of easing policy too quickly. They stressed the importance of carefully evaluating incoming data to ensure inflation is moving sustainably towards the Fed’s 2% target. Despite a brief uptick in the USD following the release of the minutes, the gains were short-lived, with market sentiment shifting towards risk, encouraged by positive earnings from Nvidia and a 1.5% increase in Nasdaq futures.
The EUR/USD pair experienced gains, reaching three-week highs around 1.0850. Meanwhile, the GBP/USD pair also saw an increase, trading above 1.2650. The AUD/USD pair moved towards 0.6600, buoyed by positive PMI data from Judo Bank. This data indicates a growth in momentum for February. In contrast, the USD/CAD pair dropped significantly during the Asian session. Gold (XAU/USD) achieved slight gains, although these were limited by US Treasury yields.
The recent dip in the US Dollar may appear temporary. However, analysis advises caution before predicting a straightforward rally in the USD index. Bearish signals and trends are evident across several currency pairs, including AUD/USD, EUR/USD, and USD/JPY. The future direction of the market will heavily depend on forthcoming economic data and central bank decisions.
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